Jan 4 What Business Are You In?

Mark Bouris, who founded Wizard home loans and runs the Aussie version of The Apprentice, tells a great story about Kerry Packer.

While in due diligence to buy Wizard from Bouris, Packer hits him with a zinger of a question: “What business are you in?”

This seems too easy to Bouris, who politely reminds him that it’s a home loan brokerage service.

But Packer sees it differently: “You’re in the business of selling hopes and dreams”

He’s right. Mortgages are boring. Buying a home is an emotional experience, not just a financial transaction. Packer wanted to ensure that Bouris understood that.

Ray Kroc, the long servicing CEO of McDonalds, had the same question for his audiences: What business I am in?

Every smartass in the room knew the answer was obvious; Hamburgers (or maybe hospitality).

Kroc’s answer was more abstract:

He was in the real estate business.

Kroc knew that the key to McDonald’s success was that they were in the prime location in every town and in every city. Say what you will about their products, McDonalds is never hard to find.

We tend to focus on what we do day-to-day, and define ourselves accordingly. The bigger question is, what factors makes your business successful? What’s on your customer’s mind when they encounter you?

If you had to change the current array of products and services you sold, what would you go to next?

This often leads to those profound “Lightbulb Moments”;

“We’re not in the medical business, we’re in the relationship business”

“We don’t just sell coffee, we let people participate in a great story”

“Customers aren’t focused on our philosophy, they want us to get rid of the problem that’s frustrating them”

This insight often requires a bit of humility, and a great deal of flexibility. Just because you have an app doesn’t mean you’re in the mobile technology business. What does the app DO for your customer? What emotions does it conjure? That’s where to focus you’re energy, as well as your identity.

Think about Louis Vuitton; what business are they in? Leather goods? Technically yes, but that’s not really what they sell, is it? I’d argue that they sell status, and leather is just the medium they work with. If it weren’t, then surely a fake Louis Vuitton wouldn’t be shameful…

Harley Davidson’s John Russell said it well:

"We sells to 43-year-old accountants the ability to dress in leather, ride through small towns and have people be afraid of them."